Wednesday, July 18, 2007

SoundExchange Negotiating In Bad Faith

As previously reported here, last Thursday the four mega-conglomerate major labels (under the pseudonym SoundExchange) agreed to allow webcasters to continue to pay royalties at the pre-CRB rates past the July 15th deadline if we continued to negotiate new rates in good faith. Just hours later the major labels started negotiating in bad faith by introducing an unreasonable post-agreement condition -- that webcasters invent and impose digital rights management (DRM) technology on our streams that will prevent stream-ripping (copying).

It is impossible to negotiate an reasonable agreement when one side keeps moving the goal posts. Under these conditions the current efforts towards a settlement are pointless -- this is precisely why we need the Internet Radio Equality Act passed. We must fix the source of this problem, namely the Digital Millennium Copyright Act, which opened up this copyright royalty loophole way back (1998) before anyone knew what internet radio would look like. Only then will webcasting be safe from the digilliterate dinosaurs whose idea of saving the movie industry was outlawing VCRs.

Besides the issue of bad faith negotiations, the major labels' DRM demand is a red herring, something that distracts attention from the real issue. For me and others I know, stream-ripping is used to time-shift programs. Like when people record a TV show on a VCR or DVR so it can be enjoyed some other time, people use stream-rippers to record their favorite internet radio shows like my (shameless plug!) award-winning "480 Minutes" program, Fridays, 9am - 5pm Pacific Time.

Copying internet radio is the a lot like copying FM radio in three main ways -- it is really easy to do, the resulting recording is lousy, and (with current technology) it is impossible to stop.

Wait! I have an idea! If the major labels can convince over-the-air radio to invest in and invent a way to prevent the recording of FM radio, webcasters will do the same for internet radio. Over-the-air radio has a 30+ year head start on us, and that still sounds fair.

Jokes aside, if anyone is willing to build a music library by copying my 64kbps stream (CDs are 320kbps) well, those few folks weren't ever going to fork over $18.98 for the new White Stripes CD, anyway. Keep in mind too that, like those mixed tapes I used to make from WLIR by leaving the record and pause buttons pressed on my boom box in the 80s, these recordings will include cross-fades between songs, public service announcements, and DJs yapping over top of them.

Despite the major labels' efforts to pin fault for their failing business model on webcasters, it is apparent to just about everyone (inluding the promotions departments at the major labels!) that airplay on internet radio promotes artists. If not us, then who could be responsible for the decline in sales? Perhaps CD sticker-shock all these years later has something to do with declining sales. Had the majors not colluded to price-fix CDs throughout the 1990s when music sales and profits were through the roof, maybe people would feel more guilty about stealing music from them? Sounds plausible.

Read the DiMA reaction to this latest major label sidestep, and check out how quickly things can turn ugly.

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